Life insurance is something a most of us need at some point in our life. Currently about 62% of people own life insurance policy in U.S., where as 85% of consumers agree that most people need life insurance. There are about 850 life insurance companies in U.S. offering different products such as term, whole life, variable life. I can see how it can easily get deterring for a lot of people.
I recently went through life-insurance buying process and realized how simple it was to buy an insurance without paying an arm and a leg for it. The life insurance policies have been commoditized over the years and the industry is so competitive, you can easily find best rates online for your needs. The service and terms of most big insurance companies are also pretty standard, there is no reason to pay more.
Here are the key questions that you need to answer before you buy life insurance.
Amount of Insurance
The amount of insurance will depend of how much income your family will lose if something were to happen to you and what expenses you anticipate that need to be taken care of in your absence. I plan to write about that in future posts.
Type of Insurance
For most people, term insurance is the best insurance policy to buy, irrespective of what other agents tell you or what your friends and their friends have. I can elaborate more but that is a topic for another post.
The term of insurance should be based on how long you think you will be financially independent and do not need to depend on insurance for your financial obligations.
Go with a company with at least A- rating to ensure company has track record and high probability to stay in business during the term of your policy.
Once you have decided you need life insurance and you know how much to get, here is what to do next.
1. Go to Term4Sale.com
I am not affiliated in any manner with Term4Sale.com. I only recommend it because I used the site to buy my life insurance policy. Term4Sale.com is an unbiased place to get life insurance quotes and comparisons for term life insurance. On the website, fill out a simple form with some questions about your age, zip code, health, amount of coverage etc. Once you do that, you will instantly get a list of companies that offer best term life insurance rates for you and their rating.
2. Find an Agent
Choose the top two companies that provide best rates and go to the next step. You will be asked to choose an agent close to you. Pick any one and fill out the form for them to contact you. Or take their number and call them directly.
3. Provide Details to Agent
Once an agent contacts you (I got a call within 10 min of filling out the form), tell them you need to term life insurance with the company you selected, the amount and the term. He might recommend a better company or better rate with other discounts if applicable.
4. Health Exam
Once the agent starts the process, the insurance representative will contact you to do a health exam. During the health exam, you might have to give your blood sample and fill out long questionnaire about your health, family history etc.
5. Insurance Company Underwriting
This can take anywhere from 4 to 12 weeks and this is the period where you are just playing a waiting game. During this time, insurance company will verify all the information you provided and assess the risk to underwrite the policy. They might request your medical records from your doctor and might reach out for additional information if they have questions. Then they make the decision and based on your insurability, they might come back with exact rate and term you want or a modified offer, which you can accept or reject and go to the next company in the list.
Once you decide to move forward, you will have to pay the annual premium and sign policy documents. Make sure you review the documents carefully and fully understand the terms. If you have any questions, the agent will help you with clarifications. And you will have a policy to protect your family in case anything were to happen to you.
With life insurance premiums so cheap, there is no reason to delay your decision to buy life insurance. Do you have a life insurance policy? What kind of policy do you have? Please feel free to share.